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Friday, 19 October 2012

Useful Tips About FIRB Applications

Hi all. I recently received this and thought that you might find it interesting.

FIRB INFORMATION SHEET

The Board examines proposals by
foreign interests to undertake direct investment in Australia and makes recommendations
to the Government on whether those proposals are suitable for approval under
the Government's policy.

Acquisitions by individual(s)

Foreign
persons are prohibited from acquiring established dwellings for investment
purposes (that is, they cannot be purchased to be used as a rental or holiday
property), irrespective of whether they are temporary
residents in Australia
or not.

However,
temporary residents can apply to purchase one established dwelling to use as
their residence in Australia.
Approval is usually provided subject to a condition that the temporary resident
sells the dwelling when it ceases to be their residence.

Acquisitions by companies

Proposals
by foreign-owned
companies to acquire second-hand dwellings for the purpose of providing housing
for their Australian-based staff are normally approved subject to the following
condition:

The company undertakes to
sell or rent the property if it is expected to remain vacant for six months or
more.

Residential

Residential
real estate means all Australian residential land and housing other than
commercial properties (such as, offices, factories, warehouses, hotels,
restaurants and shops) and rural properties (that is, land that is used wholly
and exclusively for carrying on a substantial business of primary production).
Acquisitions of ‘hobby farms’ and ‘rural residential’ blocks by foreign
interests are considered to be residential real estate.

Second–Hand (Established)
Dwellings

This
category includes all residential dwellings which are not new dwellings (that
is, they have been previously owned and/or they have been occupied for more
than 12 months).

Vacant Land

Proposed
acquisitions of vacant land for residential development are normally approved
subject to development condition(s) imposed under the FATA.

Acquisitions
of single blocks
of vacant land (that is, land which is zoned to permit the construction of no
more than one residential dwelling per block of land) for the purpose of
building a single residential dwelling on each block are normally approved
subject to the following condition:

Continuous substantial
construction must commence within 24 months.

Acquisitions
of other
vacant land (not single blocks) for the purpose of building multiple
residential dwellings are normally approved subject to the following
conditions:

* Continuous substantial
construction must commence within 24 months;

At least 50 per cent of the acquisition cost or the current market
value of the land (whichever is higher) must be spent on development.

Once
these conditions have been fulfilled, properties acquired under this category
may be rented out, sold to Australian interests or other eligible purchasers,
or retained for the foreign investor's own use.

New Dwellings

New
dwellings acquired ‘off the plan’ (before construction commences or during the
construction phase) or after construction is complete are normally approved
where the dwellings:

* Have not previously been
sold (that is, they are purchased from the developer); and

* Have not been occupied for
more than 12 months.

There
are no restrictions on the number of such dwellings in a new development which
may be sold to foreign persons, provided that the developer markets the
dwellings locally as well as overseas (that is, the dwellings cannot be marketed
exclusively overseas).

This
category includes dwellings that are part of extensively refurbished buildings
where the building's use has undergone a change from non-residential (for
example, office or warehouse) to residential. It does not include established
residential real estate that has been refurbished or renovated.

A property purchased under this
category may be rented out, sold to Australian interests or other eligible
purchasers, or retained for the foreign investor's own use. Once the property
has been purchased, it is second-hand real estate and is subject to the
restrictions applying to that category.

Residential Real Estate for
Redevelopment

Established
dwellings may be acquired for the purpose of redevelopment (that is, to
demolish the existing dwelling and build new dwellings). This does not include
refurbishing or renovating the existing dwelling. Proposals for redevelopment
are normally approved subject to the following conditions:

* The proposal must provide
for an increase in the housing stock, that is, an increase in the number of
dwellings;

* The existing residence
cannot be rented out prior to demolition and redevelopment; and

* The existing dwelling must
be demolished and continuous substantial construction of the new dwellings must
commence within 24 months.

A
redevelopment proposal which does not increase the number of dwellings may be
approved where it can be shown that the existing dwelling is at the end of its
economic life (that is, derelict or uninhabitable), since constructing a new
dwelling would effectively increase the housing stock. To demonstrate that the
property is uninhabitable and must be demolished, a valuation of the existing
structures by a licensed valuer and/or a builder’s report is generally
required. Photographs and other forms of evidence may also be required.
Approval of such proposals would be subject to the same conditions outlined
above.

Once
these conditions have been fulfilled, the new dwellings that have been
constructed may be rented out, sold to Australian interests or other eligible
purchasers, or retained for the foreign investor's own use.

Advanced Off The Plan Approval
For Developers

Developers
of 10 or more dwellings may have previously applied for advance approval to
sell up to 50 per cent of new residences to foreign interests. If such
pre-approval was granted, the developer is required to provide a copy of their
pre-approval letter to each prospective purchaser and to report all sales (that
is, Australian and foreign) to FIRB on a 12 monthly basis until all the
dwellings in the development have been sold or occupied.

As the
administrative procedures are streamlined, the current system for
developers seeking advance approval to sell new dwellings to foreign persons
will be discontinued. Until further notice, the pre-approval arrangements
that have been operating for some time will continue to operate on a
case-by-case basis. Please contact FIRB for specific advice.

All current pre‑approvals remain
valid. Where such approval has been granted, foreign purchasers should not
apply for individual approval. If the developer has not been granted advance
approval, then the individual investor must seek approval.

Exemptions

You do not need to submit an
application for approval to acquire real estate in Australia if:

you are an
Australian citizen living abroad;

* your spouse is an
Australian citizen (not a permanent resident) and you are purchasing
residential real estate in both names as joint tenants (not tenants in common);

* you are a New Zealand
citizen and you are purchasing residential property;

* you hold a permanent
resident visa and you are purchasing residential property;

* you are purchasing new
dwelling(s) from the developer, where the developer has pre-approval to sell
those dwellings to foreign persons;

* you are acquiring an
interest in a time share scheme which does not permit you (and any of your
associates) more than 4 weeks entitlement per year;

* you are acquiring an interest
in developed commercial property valued below the relevant monetary
thresholds;

* you are acquiring an
interest in developed commercial property where the property is to be used
immediately and in its present state for industrial or non residential
commercial purposes. The acquisition must be wholly incidental to the
purchaser's proposed or existing business activities;

* you are acquiring an
interest by will or by operation of law (such as, a court order regarding the
division of property in a divorce settlement, but not if both parties simply
agree to transfer property without a court's intervention); or

* you are purchasing
property from the Government (Commonwealth, State or Territory, or local).

How to Apply

If you
are applying to purchase residential real estate, you can submit an application
through the online system.

For
business proposals or applications for real estate other than residential, email or fax is the
preferred channel - do not post originals in addition to sending an application
by email or fax. Applications should only be posted to FIRB if you are unable
to submit your application via email or fax. Please note that postal
applications generally take longer to process. The addresses for submission of
applications that cannot be submitted using the online system are:

All applications that are
received via email will be acknowledged with an automatically generated message
confirming receipt. Please contact us if you do not receive an automatic
message shortly after sending your application. No fees or charges apply to
applications.

This information was gathered from Currie and Reeves Conveyancing Services, 191 Stirling Highway Nedlands. Some of the Directors of Acton Real Estate have a financial interest in the company. For more information please visit their website or FIRB directly.